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The Other Half

We are in a series outlining the big ideas that would serve as the foundation for Tim’s proposed healthcare reform plan. Click here to find the prior posts.

After visiting the make-believe CBO world, I am glad to be back in my personal Wonderland.

Medicare and Medicaid are hard because they involve the government, entitlements, taxes, and regulations. High cost people with preexisting conditions are hard because the right answer also requires involvement from the government to move resources to them from taxpayers.

But what about the half of Americans who get their health insurance through their employer? This should be relatively easier because we are talking about companies spending their own money against their rational business needs in a competitive marketplace able to innovate and change.

Now you know the bias of your humble blogger: government = hard; market = easier.

But, there are a couple of changes I’d make here.

First, the ObamaCare minimum coverage requirements are out of control. That has to be stripped back dramatically so the market can innovate around lower coverage/lower cost plans.

Second, if you go back to our idea of identifying and isolating high risk/high cost patients, and then taxing the rest of us – clearly, transparently – to cover most of their costs, we know that many of these folks are currently covered through group insurance. Give employers and commercial carriers the freedom to figure this out.

Do employers leave their high risk employees in their group plan, knowing they will pay a higher premium across the board? If so, give them a break on the high risk tax because they are paying that freight directly.

If they instead pull those people out and move them to a high risk pool (as we did at ALN for a time), fine. That will drop the premium for their healthy population A LOT, so they can afford to kick in more for the high risk tax pool.

One answer is to get employers out of the health insurance business and give the employee the tax deduction and send them off to the individual market. With the right high-risk pool solution, this can work.

But one of the benefits of group health is that some of our best innovation comes when employers collaborate with payers to design a better mousetrap.

It seems we need to allow for either option.

Going back to core principles here, I would do everything possible to allow this half of the payment universe as much freedom as possible to innovate. Besides covering 160 million people, this segment – businesses and their employees – is really funding the other half as well. You think that tax revenue just gets ordered from Amazon?

Change the laws – healthcare, tax, employment; change the office furniture, but let the market do its thing and drive costs down through competition and innovation.

And this leads us to the concept of ‘required coverage,’ a topic will cover next week.